(All comparative figures are for the fourth quarter and full year 2016)

Revenue from continuing operations for fourth quarter increased 94.4% from $12.5 million to $24.3 million, and for the year increased 128.2% from $42.6 million to $97.2 million. The acquisition of Maplesoft Consulting Group Inc in December, 2015 accounted for approximately 80% of the gain. Organic growth is approximately 20% of the gain.

Gross margin grew to $17.2 million in fiscal 2016, up from $10.6 million in fiscal 2015. Consolidated gross margins were 17.7% of revenues down from 25%, largely due to the inclusion of Maplesoft which has a lower gross margin business model.

1)Operation Income:

Cash Operating expenses declined as a % of revenue:

Salaries and other compensation costs fell from 13.5% of revenue to 8.9%

Office and general costs fell from 9.4% of revenue to 5.2%

Professional fees were $1.4 million, down from $1.7 million. Professional fees fluctuate with financings and acquisitions.

All other operating expenses are non-cash and increased from $3.2 million to $5.3 million, the largest increase being amortization, which increased by $1.9 million.

2)Divisional Performance:

The Technology Division experienced significant growth in fiscal 2016. Revenue increased from $40,927,416 to $95,807,740. Operating Income increased to $6,921,498 from $3,076,825. Organic growth in this division was over ten percent.

The Benefits Division revenues in fiscal 2016 fell from $1,652,278 to $1,420,036. The operating loss was $2,141,417 versus $1,127,018 the previous year. The increase is due to continued investment in the Benefits Division Technology Solutions to take advantage of opportunities with Joint Venture partners and SEB’s “White Label Channel Sales” strategy. Significant revenue generation from this investment is expected to result in fiscal 2017.

Corporate costs totaled $4,008,882 in fiscal 2016 versus $4,045,695 in fiscal 2015. Of this amount, cash Corporate operating expenses for fiscal 2016 were $2,699,951 of which professional fees accounted for $844,160. Comparable numbers in fiscal 2015 were $3,545,938. The differential is non-cash costs.

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3)Consolidated Earnings (Loss), Operating Income

The company recorded a net loss of $7,992,353 for fiscal 2016 versus $5,856,127 in fiscal 2015. Of this loss, non-cash expenses accounted for $5,745,678 in fiscal 2016 and $4,507,241 in fiscal 2015. Interest charges for debt was $2,727,917 in fiscal 2016 and $1,026,396 in fiscal 2015. The increased interest charges in fiscal 2017 is due to the debt assumed with the Maplesoft acquisition. Planned refinancing and the paydown of debt is estimated to reduce interest costs by over $1.3 million in fiscal 2017. One time acquisition and integration costs were $1,836,737 in fiscal 2016 and $1,010,127 in fiscal 2015. These costs included permanent operating cost reductions in excess of $1.3 million.

Operating income, prior to interest charges and net of non-cash expenses was $2,080,121 for fiscal 2016 versus a negative $748,485 for fiscal 2015.

It is expected by 2019 non-cash amortization costs will no longer be a material negative impact on earnings.

EQUITY FINANCING SUBSEQUENT TO FISCAL YEAR END

The company has, as of March 30, 2017 closed equity financing totaling of $5,730,308.

The term of this financing is $0.20 per unit where each unit consist of one share and one warrant exercisable at $0.30 per SEB share for a period of 18 months.

Closing of these financings consist of the following:

Tranche one closed $1,652,885 on November 3, 2016

Tranche two closed $1,551,560 on December 28, 2016

Tranche three closed $1,800,863 on February 6, 2017

Insiders, the majority from the President/CEO/CIO of SEB, contributed $2,010,426 of these closings.

Subsequently the Company began closing a further equity issue of $1,500,000. The following has closed:

$225,000 closed March 24, 2017

$500,000 closed March 30, 2017

Of these amounts insiders contributed $100,000.

The remainder of this $1,500,000 is expected to close imminently.

MANAGEMENT COMMENTS

John McKimm, President/CEO/CIO of SEB, states:

“SEB has progressed significantly in the past year. The Technology Division has had consistently strong growing cash flow for the past two years. Continued organic growth is expected in fiscal 2017. Backlog, renewals and option year contracts are in excess of $450 million. The Benefits division has required additional investment in fiscal 2016 to address new business opportunities with strategic partners. SEB has adopted a “Sales Channel” strategy which has resulted in multiple opportunities with strategic partners. SEB’s sales pipeline includes multiple transactions where SEB becomes the ‘strategic technology administration partner’ for organizations who already have well established client opportunities. These opportunities are Canadian, U.S. and global. SEB’s Benefits Division is well positioned for strong growth in fiscal 2017 and is expected to have significant positive cash flow. Corporate costs are declining and expected to decline further in fiscal 2017 as a % of revenue. SEB Consolidated is well positioned for growth in both revenue and cash flow in fiscal 2017.”

ABOUT SEB

Smart Employee Benefits Inc.’s global infrastructure is comprised of two operating divisions: Technology and Benefits. The Technology Division currently serves corporate and government clients across Canada and internationally. The Benefits Division focuses on offering SAAS and BPO solutions in the Health Benefits Sector to corporate and government clientele. The Benefits Division operates as a client of the Technology Division. The Technology Division is a critical competitive advantage in supporting the implementation of SEB’s benefits processing solutions into client environments. Benefits processing is a high-growth specialty practice area. Emphasis is on automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. Acquisitions, joint ventures, and RFP wins will continue to be dominant influences in driving growth in both divisions.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS RELEASE REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.